NDRA.NASDAQEndra Life Sciences INC
10-Q: ENDRA Life Sciences Reports Third Quarter 2024 Results, Faces Ongoing Financial Challenges
Sentiment:
Quarterly Report
ENDRA Life Sciences reported a net loss of $2.35 million for the third quarter of 2024 and is continuing to develop its TAEUS technology while facing financial challenges.
Delay expectedThe company has delayed its FDA submission and now anticipates submitting a new de novo request in the first half of 2025.
Capital raiseThe company states it will need to raise additional funds in order to execute on its business plan, fully commercialize its TAEUS technology, and generate revenues.The company is considering potential financing options such as sales of common stock, including through its at-the-market sales program.The company has no commitments to obtain any additional funds, and there can be no assurance funds will be available in sufficient amounts or on acceptable terms.
Worse than expectedThe company's net loss was worse than the previous year for both the three and nine month periods.The company has not generated any revenue and is reliant on external funding.The company has a going concern issue and will need to raise additional capital to fund operations.
Summary
- ENDRA Life Sciences reported a net loss of $2.35 million for the three months ended September 30, 2024, compared to a net loss of $3.1 million for the same period in 2023.
- The company's research and development expenses decreased to $794,444 for the quarter, down from $1.63 million in the prior year.
- Sales and marketing expenses also decreased significantly to $83,157, compared to $243,332 in the same quarter of the previous year.
- General and administrative expenses decreased to $631,413 from $1.25 million in the prior year.
- The company had no revenue for the three months ended September 30, 2024 and 2023.
- For the nine months ended September 30, 2024, the net loss was $7.36 million, compared to $8.6 million for the same period in 2023.
- The company's cash balance was $4.75 million as of September 30, 2024.
- ENDRA is continuing to develop its TAEUS technology and is working towards FDA approval for its NAFLD application.
- The company anticipates completing clinical studies by the fourth quarter of 2024 or the first quarter of 2025 and submitting a new de novo request to the FDA in the first half of 2025.
- ENDRA has a going concern issue and will need to raise additional capital to fund operations.
Sentiment
Score: 3
Explanation: The document indicates significant financial challenges, ongoing losses, and a delay in FDA submission. While there are some positive aspects such as reduced operating expenses, the overall sentiment is negative due to the company's reliance on external funding and the going concern issue.
Positives
- The company's operating expenses decreased significantly in the third quarter of 2024 compared to the same period in 2023.
- ENDRA is progressing with its clinical studies and anticipates submitting a new de novo request to the FDA in the first half of 2025.
- The company has a cash balance of $4.75 million as of September 30, 2024.
Negatives
- ENDRA reported a net loss of $2.35 million for the third quarter of 2024 and $7.36 million for the nine months ended September 30, 2024.
- The company has not generated any revenue from its TAEUS technology.
- ENDRA has a going concern issue and will need to raise additional capital to fund operations.
- The company's disclosure controls and procedures were deemed not effective as of September 30, 2024 due to insufficient personnel resources within the accounting function.
Risks
- The company has limited commercial experience and a history of losses.
- ENDRA's ability to obtain adequate financing to fund its business operations in the future is uncertain.
- There is no guarantee that the company will achieve profitability.
- The market acceptance of ENDRA's technology is uncertain.
- The company is subject to risks associated with regulatory approvals and potential delays.
- ENDRA's ability to regain compliance with the listing standards of the Nasdaq Capital Market is uncertain.
- The company is dependent on raising additional capital to continue operations.
Future Outlook
The company anticipates completing the necessary clinical studies by the fourth quarter of 2024 or first quarter of 2025 and submitting the new de novo request to the FDA in the first half of 2025. ENDRA expects to continue to incur significant expenses for the foreseeable future and will need to raise substantial additional capital.
Management Comments
- Management plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing.
- Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
Industry Context
ENDRA is operating in the medical device industry, specifically focusing on non-invasive diagnostic technologies. The company's TAEUS technology aims to provide a cost-effective alternative to expensive imaging technologies like CT and MRI for diagnosing conditions such as NAFLD. The company is competing with established medical imaging companies and other emerging technology developers.
Comparison to Industry Standards
- ENDRA's lack of revenue is not uncommon for early-stage medical device companies that are still in the development and regulatory approval phase.
- The company's significant operating losses are typical for companies investing heavily in research and development.
- Compared to companies with approved products, ENDRA's financial metrics are weaker, but this is expected given its pre-commercialization status.
- Companies like Butterfly Network (BFLY) and Nano-X Imaging (NNOX) are also developing innovative medical imaging technologies, but they have different approaches and target markets.
- ENDRA's focus on non-alcoholic fatty liver disease (NAFLD) is aligned with the growing prevalence of this condition and the need for cost-effective diagnostic tools.
- The company's reliance on external funding is similar to many other early-stage medical device companies.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Acting Chief Executive Officer and Chairman of the Board of Directors | na | Alexander Tokman | August 13, 2024 | Appointment of new acting CEO |
| Chief Financial Officer | na | Richard Jacroux | August 7, 2024 | Appointment of new CFO |
Legal Proceedings
- As of September 30, 2024, there were no legal matters that management believes would have a material effect on the Company's financial position or results of operations.
Related Party Transactions
- On October 17, 2023, the Company entered into a consulting agreement with one of its directors, Alex Tokman.
- On November 30, 2023, the Company entered into a Restricted Stock Agreement and Consulting Services Agreement with PatentVest, a subsidiary of MDB Capital Holdings, LLC, where two of the company's directors are also affiliated.
Stakeholder Impact
- Shareholders face the risk of further dilution due to potential equity offerings.
- Employees may be impacted by the company's financial challenges and potential restructuring.
- Customers may experience delays in the availability of the company's products due to regulatory hurdles.
- Suppliers and creditors face the risk of non-payment if the company's financial situation worsens.
Next Steps
- Complete necessary clinical studies by the fourth quarter of 2024 or first quarter of 2025.
- Submit a new de novo request to the FDA in the first half of 2025.
- Raise additional capital to fund operations.
- Continue development of TAEUS technology.
Key Dates
| Date | Description |
|---|---|
| July 18, 2007 | ENDRA was incorporated as a Delaware corporation. |
| April 27, 2020 | The Company entered into a commitment loan with TD Bank under the Canadian Emergency Business Account. |
| March 2020 | ENDRA received CE mark approval for its TAEUS FLIP System. |
| June 2020 | ENDRA submitted a 510(k) Application to the FDA for its TAEUS Fatty Liver Imaging Probe (FLIP) System. |
| June 21, 2021 | The Company entered into the At-The-Market Issuance Sales Agreement with Ascendiant. |
| February 2022 | ENDRA announced it would pursue FDA reclassification and clearance of its TAEUS FLIP System through the FDA's de novo process. |
| February 14, 2024 | The Company entered into a new At-The-Market Issuance Sales Agreement with Ascendiant. |
| June 4, 2024 | The Company entered into a placement agency agreement with Craig-Hallum Capital Group LLC. |
| June 5, 2024 | The Offering closed. |
| August 7, 2024 | The Company's Board of Directors appointed Richard Jacroux as Chief Financial Officer. |
| August 13, 2024 | Alexander Tokman was appointed as the Company's acting Chief Executive Officer and Chairman of the Board of Directors. |
| August 20, 2024 | A reverse split of the Company's common stock by a ratio of one-for-50 was effectuated. |
| October 28, 2024 | A Special Meeting of Stockholders of the Company was held. |
| November 11, 2024 | The company issued 2,007 shares. |
| November 13, 2024 | The company issued an additional 38 shares. |
| November 19, 2024 | The date of the 10-Q filing. |
Keywords
TAEUS, NAFLD, FDA, Thermo-Acoustic Enhanced Ultrasound, Liver Disease, Medical Device, Clinical Trials, Regulatory Approval, Warrants, Financial Results
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